Brave Politics – Now Labour Must take on The Banks


We see it, we fear it – the future of our planet, its sustainable resources, and life as we have known it, collapsing, because of the money system. Can we stop it?


We are invited to buy property,  pay interest to bankers, who have the ability create money, out of thin air, at the click of a mouse. ( What is Money , Positive Money ?) If we all tried that, what do you think would happen? Reckless, unethical bankers are happy to arrange mortgages stretching people to and beyond the limit. Is there such a thing as  ethical banking? Many of us have relied on mutual building societies and  supposedly “ethical banks” such as the Co-op bank. That trust soon evaporated as the headlines in the media reported the takeover of the Co-op bank  this month.

People, now happily moving into homes face rising interest on mortgages as the banks will force rate rises, just as energy companies have raised charges.  How will they manage? The Guardian is reporting possible interest rate changes by 2015. Who will the media blame then?

It is essential for that any incoming governments are brave enough to confront bankers and money-lenders  who prey on people. Governments must address the way money is created used and distributed. Money should be serving us, not us serving money.


We are The Debt Generation. Money is a tool, not a resource. And it’s a broken tool.  We need Positive Money to be fit for the purpose.


We can thank some brave politicians in history that health care and education for all is no longer just the domain of the rich and privilege, but universal. It should be a priority for Labour.  Harold Wilson’s Open University widened the access to education such had never been seen before. The provision of maintenance grants enabled students to concentrate on study.

Doctors, engineers, scientists and lawyers from working class families had access to education  and all of society reaped the benefits. Every person’s life is enriched by high quality education. We need quality training too and we need specialists; engineers, doctors, road builders, teachers, builders and firefighters.

We can all see these benefits, so provision of maintenance grants, and universal access through the Open University is investment in the future. 

But today, the Open University is too costly for many. Students are taking on massive loans, and debt. If they finish their course, and find employment, then it’s a struggle to pay for a home, or for a car. And what next? A loan for health? For childcare? A loan for elderly care?  And so it goes on to the next generation.

Every part of our lives is now at threat because of the banking system. The financial system is so invasive, all consuming, and  like a flawed  parasite, greedy and foolish, and is destroying it all.  The reality is a lifetime of paying for money which magically came from nowhere. It’s a far cry from care from cradle to grave.

So where did all the brave politicians go?



Whether it is business, or individuals, the banks are in a win-win situation. The financiers maintain control because the system is so heavily biased in their favour. The money made up from nothing, can grow, like a weed out of control. Debts become unsurmountable…  and all because of interest. 

In this video, Professor Dr. Margrit Kennedy describes how flaws in the money system cost us all about 40% extra for everything – interest costs. Interview by Dimitri Devyatkin. 


Not all loans charge interest. In Islamic Banking, there is no interest charged.

Islamic finance is all about sharing risk between financial institutions and the individuals that use them. To do that, the two parties are tied into a longer-term relationship with each other that is supposed to shift incentives and avoid cut and run financial deals. So how can banks that don’t charge interest survive? It’s a question worth answering, not least because academics have argued that the financial crisis wouldn’t have happened if the global economy was regulated by Islamic finance.



This is an interesting idea, but still retains the control to the banks who hold the money, and not collectively by all, which is how it should be in a democracy.

While Islamic finance addresses the problems caused by interest, I would prefer to see a government owned bank retaining  democratic control.  Power should be returned to the people – and so should the money system. The majority now despise the banking system with suspicion, and want to see real change – not more of the same faux-governments, too weak against the financial institutions.

Like a few in history, future politicians brave enough to present and adopt the proposals of Positive Money will be welcomed. It is time for Labour to be brave, and let the people know where it stands.

Speak up, Ed! Positive Money, Positive Labour.

So, we all use Money …but what is Money?


So, What is Money? 

Money is Debt!

  • Personal debt is at its highest level in history – an average of £54,000 per family
  • We currently pay £192 million in interest to the banks every single day
  • Almost no-one under 40 can afford a house
  • Over 2 million people can’t find work in the UK
  • But the government’s ‘answer’ to this debt crisis is to get people to borrow even more… 

It doesn’t have to be this way!

Positive Money is Campaigning to change the Way Money is Created – and has Proposals for How to Fix the Banking System. Perhaps George Osborne should listen! He is ignoring all the expert advice so what is George Osborne playing at? It is probably a great mistake to think that George Osborne, or at least those advising him, do not know what they are doing.  What George Osborne might gain as a result of taking the flak for being the ‘worst Chancellor’ of all times is a matter for speculation.

Economics is easy to understand – a ten-year-old explains


During the 2010 election campaign I heard the Sun columnist Kelvin Mackenzie talking about economics.

Economics is very complicated,” he said. “You have to be a genius to understand economics.”

This is not true. Economics is easy to understand. Wealth comes from human beings. It’s as simple as that. It comes from human beings engaging with nature in an intelligent and productive way in order to make all of the things we want and need. It is work that makes wealth. This is so obvious an observation that it hardly needs commenting upon. All of the classical economists understood it: Adam Smith and John Stuart Mill, as well as Karl Marx.

The reason that modern economics has become so complex is that it has attempted to obscure this simple fact behind a fog of distraction in order to hide the processes by which a very few people have become more and more obscenely wealthy, while the rest of us are being squeezed to the point of desperation.

Indeed, while we do the work someone takes the wealth.

Economics is simple, as explained here by a ten-year-old.
10 year old Holly explains where money really comes from, why is there so much debt and what it means for you…

Have you ever tried to do a jigsaw puzzle but one of the pieces was missing? Well, the financial crisis and all the trouble since then is a bit like that.Now, it suits Bankers and politicians to complicate the matter, to confuse us , and muddy the waters so that it is possible to achieve their own ends.

Does Nick Clegg know where money comes from? … the Bears explain.


Only someone who doesn’t know where money comes from, could possibly believe that the UK was ever in danger of becoming like Greece.  Will Hutton calls the idea risible.  So, giving Nick Clegg the benefit of the doubt over his veracity, the Bears will explain for him where money comes from …

“Modern finance is generally incomprehensible to ordinary men and women….. The level of comprehension of many bankers and regulators is not significantly higher.

It was probably designed that way. Like the wolf in the fairy tale:

“All the better to fleece you with.”

–Satyajit Das,a risk consultant and author of Traders,Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives –Revised Edition (2010, FT-Prentice Hall).

Economist J. K. Galbraith :

The process by which banks create money is so simple that the mind is repelled. When something so important is involved, a deeper mystery seems only decent.

Physical cash accounts for less than 3 per cent of the total stock of money in the economy. Commercial bank money – credit and coexistent deposits – makes up the remaining 97 per cent of the money supply.

There are several conflicting ways of describing what banks do. The simplest version is that banks take in money from savers, and lend this money out to borrowers. This is not at all how the process works. Banks do not need to wait for a customer to deposit money before they can make a new loan to someone else. In fact, it is exactly the opposite; the making of a loan creates a new deposit in the customer’s account.

More sophisticated versions bring in the concept of ‘fractional reserve banking’. This description recognises that banks can lend out many times more than the amount of cash and reserves they hold at the Bank of England. This is a more accurate picture, but is still incomplete and misleading. It implies a strong link between the amount of money that banks create and the amount that they hold at the central bank. It is also commonly assumed by this approach that the central bank has significant control over the amount of reserves banks hold with it.

We find that the most accurate description is that banks create new money whenever they extend credit, buy existing assets or make payments on their own account, which mostly involves expanding their assets, and that their ability to do this is only very weakly linked to the amount of reserves they hold at the central bank. At the time of the financial crisis, for example, banks held just £1.25 in reserves for every £100 issued as credit. Banks operate within an electronic clearing system that nets out multilateral payments at the end of each day, requiring them to hold only a tiny proportion of central bank money to meet their payment requirements.

Related Posts:

New Economics Foundation – ‘Where does money come from?’  (video clip)

6 Myths about Money & Banking – Josh Ryan-Collins (video clip from positive money)

Positive Money: How to Fix the Banking System (and make it less socially harmful)


The privatised creation of money by banks is at the root of debt, poverty, inequality, unaffordable housing. It makes our boom-and-bust economy completely unstable, and is also fueling the environmental and energy crisis.

Positive Money have spent the last couple of years thinking about how to address the biggest flaws in the banking system, and how to stop banks expanding the money supply recklessly. The ideas below are one way to do this. It’s certainly not the only way but Positive Money believe it is one of the best options currently on the table and would be a massive improvement over the banking and monetary system we have today.

Fix the Money System (part 1 of 3)

In this part:
3 key questions:
1. Who should create money? (00:24 min)
…separate the decisions over “How much money” and “What for” (04:02 min)
2. How much money should they create? (06:56 min)
…about inflation (09:20 min)
3. How should they use the money they created? (10:53 min)

Fix the Money System (part 2 of 3)

In this part:
About one of the ways how newly created money could be used – to reduce VAT.
How will new money be distributed to the economy (01:21 min)
How we will reduce the debt burden across the society (02:00 min)
– smooth transition to a healthy level of debt (04:03 min)
– how we could get rid of a lot of unproductive, socially harmful speculation (05:27 min)
This proposal is an update of 1844 Bank Charter Act (Robert Peel) (07:39min)
Lost government revenue to date £2.1 trillion (09:39 min)

Fix the Money System (part 3 of 3)

In this part:
The concerns about the reform proposal:
1. What about the Credit? (00:54 min)
2. We might lose the taxes from banks… the real contribution of banks, and who is really paying the taxes (03:57 min)
3. Wouldn’t the banks just leave? (07:03 min)

Draft legislation of the reform proposal (Bank of England Act)
3 steps:
1. Make banks ask your permission before lending your money (09:27 min)
2. Make them tell us how they’ll use our money (11:01 min)
3. …more here:

Benefits of reform (11:29 min):
– no more bailouts
– no more subsidies
– less poverty
– more jobs
– falling debt
– less inequality

A shorter 20 minute video is available: